Incremental cost-effectiveness ratio
Encyclopedia
The incremental cost-effectiveness ratio of an intervention in health care is a term used in cost-effectiveness analysis in health economics
. It is defined as the ratio of the change in costs of a therapeutic intervention (compared to the alternative, such as doing nothing or using the best available alternative treatment) to the change in effects of the intervention.
The term does not have the standard economic meaning. Normally, the effects of an incremental change refer to the effect of an additional unit of a specific measurement - for example, the effect of an additional dollar spent on a public health awareness campaign. However, in this case, we are not comparing the effects of an incremental change in some intervention, but rather the effect of switching interventions.
Often, the change in effects is measured in terms of the number of quality-adjusted life years (QALYs) gained by the intervention. This includes both health differences during the time alive, and years won/lost due to a different time of death.
(QoL) from 0.5 to 0.6 for the remainder of their life from age 70 and onwards, and their expected lifespan increases from 73 to 75, the total gain in QALYs is 0.1*3 + 0.6*2 = 1.5. The ICER will then be GBP 45,000/1.5 = GBP 30,000.
Health economics
Health economics is a branch of economics concerned with issues related to efficiency, effectiveness, value and behavior in the production and consumption of health and health care...
. It is defined as the ratio of the change in costs of a therapeutic intervention (compared to the alternative, such as doing nothing or using the best available alternative treatment) to the change in effects of the intervention.
The term does not have the standard economic meaning. Normally, the effects of an incremental change refer to the effect of an additional unit of a specific measurement - for example, the effect of an additional dollar spent on a public health awareness campaign. However, in this case, we are not comparing the effects of an incremental change in some intervention, but rather the effect of switching interventions.
Often, the change in effects is measured in terms of the number of quality-adjusted life years (QALYs) gained by the intervention. This includes both health differences during the time alive, and years won/lost due to a different time of death.
Example
If a fictional treatment costs a total of GBP 45,000 at today's value and increases a person's quality of lifeQuality of life
The term quality of life is used to evaluate the general well-being of individuals and societies. The term is used in a wide range of contexts, including the fields of international development, healthcare, and politics. Quality of life should not be confused with the concept of standard of...
(QoL) from 0.5 to 0.6 for the remainder of their life from age 70 and onwards, and their expected lifespan increases from 73 to 75, the total gain in QALYs is 0.1*3 + 0.6*2 = 1.5. The ICER will then be GBP 45,000/1.5 = GBP 30,000.